Before embarking on our second annual tour of how philanthropy may affect America and the world in the year ahead, let's pause for a reality check: The nonprofit sector accounts for just 5 percent of GDP, and all the money Americans give annually to charity would fuel the federal government for, oh, about 34 days. Coca-Cola spends nearly as much on advertising every year as the world's biggest foundation, Gates, devotes to all its grantmaking. The New York City public school system spends more money in two weeks than the mighty Ford Foundation gives away in twelve months.
Philanthropy remains the puny cousin of the big kids on the block, business and government, and so we need to keep in check expectations about what private giving can accomplish.
That said, the power of foundations and major donors is rising. New wealth is flowing into philanthropy, often coming from hard-charging givers with big ideas. Endowed legacy outfits are stepping up their games. More intermediaries and collaborations are connecting the dots. Even once-dowdy corporate funders are getting more sophisticated.
Meanwhile, the fiscal screws are tightening on government at all levels, leaving it without as much spare cash to solve problems—and creating vacuums that private donors move to fill. A top story in today's philanthropy, in other words, is how both rising supply and demand is changing the balance of power between key sectors of U.S. society. More funders are stepping forward, even as government is pulling back.
Some of the trends that we're watching closely at Inside Philanthropy relate to this overarching power shift, which will accelerate under Trump as an ascendant GOP whacks government in both Washington and the states. Other trends reflect the changing interests of funders as various issues seem more or less urgent. Still others are about the evolving ways that philanthropic money is managed and deployed.
Let’s dive into what this year might bring. All links below lead to IP articles that offer more context for our predictions.
Predictions for 2017
Funders Fight Trump
A few months ago, it looked like 2017 might be a warm and cuddly year for philanthropy inside the Beltway as a president with deep ties to the nonprofit world rolled out new public-private partnerships to tackle major problems. Instead, a businessman with little interest in philanthropy and few ties to nonprofit leaders will occupy the White House—pursuing policies that have set off alarm bells among many foundations and major donors. Forget a new love fest between government and civil society under a Clinton presidency. Now we're looking at pitched battles.
New Donors Mobilize
Presidents with strong agendas tend to mobilize new oppositional donors. During the Bush years, a number of new progressive funders emerged to counter the right's agenda, forming the Democracy Alliance and bankrolling groups like the Center for American Progress. Under Obama, the flow of conservative philanthropic dollars surged, with think tanks like the Heritage Foundation and AEI breaking all previous fundraising records. Look for Trump's first year in office to bring out new donors on both the left and the center. That multiple billionaires are lining up to fight Trump underscores just how divided America's upper class has now become.
Philanthropy Comes Under Attack
Given growing populism and distrust of elites, we've been predicting for a while now that philanthropy will start to draw new fire. Still, even we were surprised by the unprecedented negative media attention to philanthropy this election season, with extensive coverage of real and imagined scandals at the Trump and Clinton foundations. It stands to reason that foundations, always murky entities to most Americans, will now be viewed with even more suspicion. We can think of three ways that distrust of philanthropy may play out in 2017: First, Trumpists might directly target those foundations and philanthropists who challenge the administration's agenda. Second, the charitable tax deduction could face new challenges as Congress finally gets serious about tax reform. And third, efforts to regulate university endowments—the biggest pots of elite private money—will continue to gain traction.
Another Record Year of Giving…
Even as philanthropy comes under fire, giving is likely to once again set new records in 2017. The prospect of Trump tax policies may spur a rush of donations this year before the law changes and lowers the tax savings from giving. More broadly, the rich have lately gotten richer as the value of all assets has soared, led by a strong stock market. Meanwhile, the exploding use of donor-advised funds has created a new kind of “millionaire philanthropist next door.” And while online fundraising from small donors hasn't yet lived up to the hype, it keeps gaining steam.
…Before a Falloff Looms
Enjoy the good times while they last, fundraisers, because they probably won’t. Quite apart from the long-term dampening effect of Trump tax policies, we could well see a stock market correction and a slowing of job growth later this year, ushering in new economic anxiety—which will lead some spooked donors to pull back. And if an inexperienced president does something stupid on the global stage (think China), look for markets to nosedive, dragging giving down with it.
The DAF Express Gains Speed, With Curves Ahead
Whatever happens with the overall trajectory of giving, it seems likely that donor-advised funds will expand even further in 2017, building on another record year in 2016. This remains one of the biggest stories in philanthropy, underscoring today's mass hyper-affluence and new patterns of giving. Some of the largest U.S. grantmakers are now DAFs. Fidelity Charitable, for example, is second only to the Gates Foundation in how much money it gives annually. But DAFs face threats in 2017, too, as Congress takes up tax reform, finally giving critics an opening to push DAF reform.
Intermediaries Ride High
DAFs are the most prominent middlemen helping new donors find their way, but there are plenty of others, and this entire sector will grow bigger in 2017. Intermediaries dedicated to particular causes or ideologies or groups of donors offer a way for busy philanthropists to connect with the right peers and grantees. That kind of help is especially valuable for younger donors who aspire to ambitious giving while they’re still immersed in their careers and don’t have the bandwidth to staff up a foundation.
Impact Investing Grows
Impact investing will keep rising in 2017, as it did last year, with a number of top grantmakers stepping things up. For example, the Open Society Foundations announced $500 million in investments to help refugees in Europe, while MacArthur and the Chicago Community Trust rolled out a $100 million impact investment effort in Chicago. Kresge also stepped up its investing, as did Gates (the biggest impact investor among foundations). Look for more moves in 2017 by both legacy funders and newer West Coast outfits like the Chan Zuckerberg Initiative and the Emerson Collective.
Big Bets Get Even Bigger
Funder interest in making “big bets” grew in 2016; look for more of the same in 2017. Last year, MacArthur announced a competition for a $100 million grant to back a single transformative idea. Chan and Zuckerberg put up $3 billion to conquer disease; Sean Parker rolled out a $250 million bet on cancer immunotherapy; Laurene Powell Jobs put up $100 million for high school redesign; and several top donors and foundations backed a $1 billion collaboration to help disadvantaged children. Bridgespan has been a key cheerleader here, releasing a series of reports serving up shovel-ready big bets.
Tech Philanthropy Keeps Exploding
Members of the Forbes 400 who made their wealth in tech now have combined assets of around $600 billion. Many of these people have only recently turned to philanthropy in a major way, so expect the news of major gifts and initiatives from this crowd to keep coming at a brisk clip in 2017. We still haven’t heard much yet—for example, from Jeff Bezos (net worth: $70 billion), the Google Guys (nearly $80 billion between them), and Steve and Connie Ballmer ($29 billion). Beyond these whales, plenty of tech winners with smaller piles are likely to keep stepping up—like Reid Hoffman and Michelle Yee, Mike and Kaitlyn Krieger, and James and Susan Swartz.
Women Donors Move Further to the Front
The rise of new women mega-givers and growth of women’s funding networks has been one of the biggest philanthropy stories in recent years. That trend will accelerate in 2017, not just because of the key underlying driver, here—i.e., that more women now control more wealth—but because new threats to gender equity under Trump will quicken the pace at which wealthy women come off the sidelines.
Defenders of Reason and Civility Step Up
After a horror show of an election featuring fake news, nativist appeals, and a disregard for facts, look for centrist do-gooders to step forward in 2017 with new initiatives to fund independent journalism, civic education, and national dialogue. Alas, such efforts aren’t likely to get very far, given that philanthropy has limited traction over the powerful forces eroding public life, such as deep distrust in all institutions, geographic self-sorting by Americans, a fragmented news landscape, and the rise of right-wing populism.
White Rural America Finally Gets Attention
The deep alienation and anger of non-college-educated whites, especially in rural areas, long drew little notice from funders largely based in coastal America and oriented toward helping cities and communities of color. Look for some funders to try to make up for past neglect in 2017 with new initiatives to boost places like Appalachia and the Rust Belt. Research dollars will also flow to put Trump voters under a microscope and sort out post-election debates on their motives.
Automation Fears Rise
Inequality got lots of funder attention in 2016, and one equity issue that is likely to get hotter this year is how new technologies, like artificial intelligence and robotics, are displacing workers. Look for more grant dollars to flow for AI watchdogs, following last year’s pattern, and for more funders to show interest in the once-radical idea of a universal basic income—joining a growing array of philanthropists who are already thinking about the UBI.
Global Security Returns
Philanthropy hasn’t worried much about U.S. national security issues since the end of the Cold War. Even 9/11 and two wars overseas didn’t put these issues back on the front burner, since jihadists have never posed the kind of existential threat that the nuclear arms race did. Now, as the postwar order crumbles and a dangerous rivalry with China heats up, things might get scary enough to vault global security giving back into the top tier of funder concerns.
New Climate Mega-Donors Emerge
Climate trends were scary enough before Trump put fossil fuel allies in charge of U.S. environmental policy. With that grave step backwards, look for new donors to step forward and existing donors to double down as the global warming clock ticks even louder. (An iceberg the size of Delaware, for example, is poised to break off of West Antarctica.) With 50 Americans worth over $10 billion, there are plenty of candidates to become new mega-givers in the climate space and plenty of spare cash for current green donors to do much more.
Immigration Giving Surges
The early Obama years saw a lot of interest in immigration among funders eager to enact comprehensive reform, as well as to create new opportunities for “DREAMers.” Some funders then pulled back as hopeful policy doors were closed. Now, a new wave of immigration funding is starting to flow, this time in the form of emergency grants to groups mobilizing for dark times under Trump. The dollar signs here could get pretty eye-popping in 2017. (Keep an eye on George Soros: The last time there was a crackdown in this area, in 1996, he made a $50 million grant.)
Criminal Justice Funding on Probation
The past few years have seen new funding and new momentum on criminal justice. But with a hardline Trump administration likely to block reform, some funders might rightly wonder if this remains a promising area for grantmaking. On the other hand, there’s plenty of action in states and localities, which make most policies on criminal justice anyway, so rather than a retrenchment of giving, maybe we’ll see an even greater local focus by funders.
Federalism Turns Fashionable
Criminal justice won’t be the only area where more funders will look to the states (a.ka., “laboratories of democracy”) to move the needle on the issues they care about in 2017. With GOP dominance in Washington, look for more funders to “think blue” and push big ideas in places like Sacramento and Albany, as well as in city halls nationwide, on issues like climate change and worker rights.
Health Funders Stop Heading Upstream…
A flotilla of health funders has lately focused new grant dollars on the underlying determinants of health, funding areas like housing, transportation, parks and food systems. But it’s an open question whether trying to tackle such big “upstream” problems is the best way to leverage scarce health dollars, especially with insurance coverage for millions now threatened. Expect some health funders to pivot back to bread-and-butter concerns.
…And Fight to Save Obamacare
Job No. 1 for many health funders will be defending gains made under the Affordable Care Act. Much of this action, too, will unfold at the state level, where funders like the California Endowment are already moving to protect their huge investments in implementing Obamacare.
Campus Gifts Keep Getting Bigger
The Helen Diller Foundation kicked off 2017 with a bang when it announced a $500 million gift to the University of California, San Francisco. It’s one of the biggest campus gifts ever, and comes just three months after a record gift of equal size to the University of Oregon by Phil and Penny Knight, and 18 months after John Paulson’s $400 million gift to Harvard. Get ready for more such donations as aging billionaires move to dispose of record fortunes, with universities the best positioned of all nonprofits to absorb the really big money.
But Donors Worry More About the Plight of Students
With too many college grads ending up back at home, we’re seeing an uptick in big campus gifts to help college students succeed in the real world, especially as entrepreneurs, and expect more such gifts in the year ahead. What we haven’t seen yet are top alumni donors leaning hard on schools to control the tuition costs that saddle students with heavy debt. Listen for shots fired on this front in 2017.
Basic Science Research Draws Reinforcements
An unusual effort by top science funders like Simons and Kavli to educate and recruit new donors to their cause through the Science Philanthropy Alliance is starting to yield dividends. Look for new donors coming into basic science in 2017 amid news of more cuts to government research budgets and China’s growing bid to compete on this front with the U.S.
New Art Museums Are Born
This year is again likely to bring new art museums founded by wealthy collectors. A big reason is that top existing museums have far more art than they can exhibit and no one wants their precious pieces sitting in storage. Even as questions endure about the public demand for new art museums, look for a growth in the supply in 2017 as older collectors turn to their end games.
Even if Donald Trump hadn’t won the election, 2017 was poised to be an interesting year in philanthropy—just as every recent year has been, as the rich step up their giving. The net worth of America’s top 1 percent—and especially, the top .01 percent—has never been greater than it is today and never before has giving been more in vogue among the wealthy than it is now. An aging population is another factor spurring today’s golden age of philanthropy, along with the growing ease of giving with so many charitable services available. That giant generational wealth transfer we’ve long been hearing about is really getting underway.